Japan’s economy expanded faster than expected last quarter, led by solid domestic demand, boosting the case for the Bank of Japan (BOJ) to raise its benchmark rate again this year while giving embattled Japanese Prime Minister Shigeru Ishiba some rare good news.
Gross domestic product grew at an annualized pace of 1 percent in the three months through June from the prior period, surpassing economists’ forecast of a 0.4 percent gain, the Japanese Cabinet Office reported yesterday.
Authorities revised the previous quarter’s results to 0.6 percent growth, reversing from a preliminary contraction.
Photo: AFP
Gains were led by business investment, which rose 1.3 percent from the previous quarter, surpassing the consensus estimate of 0.7 percent growth. Private consumption nudged 0.2 percent higher.
Signs of stronger-than-expected resilience in the economy would likely encourage views that the central bank would hike again this year. While the BOJ is expected to hold steady when it next sets policy on Sept. 19, some 42 percent of economists surveyed by Bloomberg anticipate a move in October. BOJ Governor Kazuo Ueda last month said that authorities would keep raising borrowing costs if they are confident domestic demand could stay steady.
“I had been expecting a rate hike in October, and I feel like the chances of that have gone up a bit,” said Atsushi Takeda, chief economist at Itochu Research Institute. “The market consensus also seems to be shifting toward an earlier hike now.”
“Japan’s surprisingly strong second-quarter GDP bolsters the Bank of Japan’s case for a near-term rate hike, providing evidence that domestic demand is holding firm despite higher US tariffs,” Bloomberg economist Taro Kimura said.
Yesterday’s GDP figures are the first to reflect the impact of US President Donald Trump’s tariffs and auto levies, which took effect in April. During the period, Japan faced a 10 percent baseline tariff along with 25 percent levies on cars. A 25 percent tax on US steel imports introduced in March was doubled in early June.
“Even amid all the uncertainty surrounding US tariffs, business investment has also been growing steadily,” said Hiromu Komiya, economist at the Japan Research Institute.
Ishiba’s administration has said the car levies would be set at 15 percent, the same as the current baseline rate, once Washington adjusts executive orders in line with an agreement reached late last month.
Earlier this month the government cut its real growth projection for this fiscal year to 0.7 percent from a previous forecast of 1.2 percent. The downgrade partly reflected a darkening global economic outlook resulting from Trump’s trade policies.
Against that backdrop, the economy’s show of resilience in the April-June period would provide some political relief for Ishiba, whose ruling coalition lost its majority in the upper house in last month’s election partly due to widespread frustration over the persistent rise in costs of living.
The third quarter might reflect a bigger impact from tariffs now that front-loading has stopped. Other risks to growth include persistent inflation, with data due next week expected to show consumer price growth remained well above the BOJ’s target last month.
With this year’s Semicon Taiwan trade show set to kick off on Wednesday, market attention has turned to the mass production of advanced packaging technologies and capacity expansion in Taiwan and the US. With traditional scaling reaching physical limits, heterogeneous integration and packaging technologies have emerged as key solutions. Surging demand for artificial intelligence (AI), high-performance computing (HPC) and high-bandwidth memory (HBM) chips has put technologies such as chip-on-wafer-on-substrate (CoWoS), integrated fan-out (InFO), system on integrated chips (SoIC), 3D IC and fan-out panel-level packaging (FOPLP) at the center of semiconductor innovation, making them a major focus at this year’s trade show, according
DEBUT: The trade show is to feature 17 national pavilions, a new high for the event, including from Canada, Costa Rica, Lithuania, Sweden and Vietnam for the first time The Semicon Taiwan trade show, which opens on Wednesday, is expected to see a new high in the number of exhibitors and visitors from around the world, said its organizer, SEMI, which has described the annual event as the “Olympics of the semiconductor industry.” SEMI, which represents companies in the electronics manufacturing and design supply chain, and touts the annual exhibition as the most influential semiconductor trade show in the world, said more than 1,200 enterprises from 56 countries are to showcase their innovations across more than 4,100 booths, and that the event could attract 100,000 visitors. This year’s event features 17
EXPORT GROWTH: The AI boom has shortened chip cycles to just one year, putting pressure on chipmakers to accelerate development and expand packaging capacity Developing a localized supply chain for advanced packaging equipment is critical for keeping pace with customers’ increasingly shrinking time-to-market cycles for new artificial intelligence (AI) chips, Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) said yesterday. Spurred on by the AI revolution, customers are accelerating product upgrades to nearly every year, compared with the two to three-year development cadence in the past, TSMC vice president of advanced packaging technology and service Jun He (何軍) said at a 3D IC Global Summit organized by SEMI in Taipei. These shortened cycles put heavy pressure on chipmakers, as the entire process — from chip design to mass
Germany is to establish its first-ever national pavilion at Semicon Taiwan, which starts tomorrow in Taipei, as the country looks to raise its profile and deepen semiconductor ties with Taiwan as global chip demand accelerates. Martin Mayer, a semiconductor investment expert at Germany Trade & Invest (GTAI), Germany’s international economic promotion agency, said before leaving for Taiwan that the nation is a crucial partner in developing Germany’s semiconductor ecosystem. Germany’s debut at the international semiconductor exhibition in Taipei aims to “show presence” and signal its commitment to semiconductors, while building trust with Taiwanese companies, government and industry associations, he said. “The best outcome
RSS